AAT joins campaign to flag dirty money

The AAT is the latest body to back the government’s Flag it up campaign which highlights the threat posed to accountancy by money laundering.

With accountants being a constant target for criminals, the accountancy body has urged AAT members to flag any suspicious activity, or if a colleague or client is exploiting their professional skills or services to conceal the origins of their crime.

Explaining why the accountancy body is supporting the campaign, Adam Williamson, head of professional standards at AAT, said, “In the accountancy sector, most of us are aware of the serious threat that money laundering poses to the profession, as well as to the economy.

“It’s important for AAT members to always be on the lookout for the red flags of money laundering. But beyond that, we also need to understand the importance of reporting, should we encounter what could be considered to be suspicious activity.”

The flag it up campaign encourages accountants to spot money laundering red flags and submit a suspicious activity report (SAR) to the National Crime Agency (NCA). These warning signs often include overly secretive or evasive clients, odd discrepancies in a client’s transactions or business activities, or if the amount or source of a client’s funds seem unusual.

The NCA’s national strategic assessment 2018 highlights the scale of money laundering, with an estimated cost of £24bn to the UK annually.

But the risks of money laundering aren’t just a financial blow to the UK. Where these red flags go unnoticed, accountants and their firms can become caught up in criminality which could result in reputational damage, fines and prosecution.

Spot the red flags

Accountants are under a legal obligation under the money laundering regulations 2017 to file an SAR when they spot something suspicious, and the flag it up campaign highlights how a high-quality SAR can provide crucial intelligence for law enforcement. But as well-respected AccountingWEB member David Winch noted on the recent On Compliance podcast (click play below to listen), accountants can be guilty of filing poor SARs.

At the recent National Crime Agency conference, attended mainly by bankers, Winch discovered to his horror that it wasn’t bankers being singled out but accountants and lawyers. “It turns out that when an accountant files a suspicious activity report, very often they know what they mean and understands it,” said Winch.

“But the NCA officer, who is not an accountant and who doesn’t know where the accountant is coming from, looks at it and marks it unhelpful because it is not clear what the suspicion is.”

Winch also explained in the podcast that some accountants complete the SAR as if they’re talking to another accountant. So what they may think demonstrates tax evasion may not be clear to the person receiving the form, who may deal with a range of professional services.

And tax evasion is not the only crime that accountants might need to report, noted Winch. He has raised SARs for drug, trading standards and planning offences, such as people operating businesses without planning permission.

Stand back

But with the profession moving away from the annual event of a client turning up with their end-of-year books into a year-round system, Winch advised accountants to ensure they continue to regularly review their AML data.

“Because we are so used to seeing the same things year after year with clients, sometimes we fail to notice the obvious,” said Winch. “So if you get a knock on the door from the police or HMRC or local authority trading standards you can find that you missed something which they regard as frighteningly obvious.”

“It is amazing if you stand back and look at something as if you were a stranger to it, you suddenly see things and ask questions which you never asked year-by-year, quarter-by-quarter and would seem obvious to an outsider,” said Winch.

Listen to David Winch and AML expert Richard Simms in the below ‘On Compliance’ podcast talk more about how accountants can remain AML compliant.

Replies

It's worrying that HMRC seem to consider using multiple bank accounts when buying a house (for cash) as "frighteningly obvious" money laundering in the link below, but anyone sensible would spread their cash around multiple accounts so that it does not exceed the c£85k government safety net protected limit!